Harrison Cnty. Commercial Lot, LLC v. H. Gordon Myrick, Inc.

• Decision Date: 31 January 2013
• Docket Number: Nos. 2010–CA–01865–SCT, 2010–CA–01891–SCT.,s. 2010–CA–01865–SCT, 2010–CA–01891–SCT.
• Citation: 107 So.3d 943
• Parties: HARRISON COUNTY COMMERCIAL LOT, LLC v. H. GORDON MYRICK, INC. and H. Gordon Myrick, Jr., Individually Harrison County Commercial Lot, LLC v. H. Gordon Myrick, Inc. and H. Gordon Myrick, Jr.
• Court: Mississippi Supreme Court

107 So.3d 943

HARRISON COUNTY COMMERCIAL LOT, LLC

v.H. GORDON MYRICK, INC. and H. Gordon Myrick, Jr., Individually

Harrison County Commercial Lot, LLC

v.H. Gordon Myrick, Inc. and H. Gordon Myrick, Jr.

Nos. 2010–CA–01865–SCT, 2010–CA–01891–SCT.

Supreme Court of Mississippi.

Jan. 31, 2013.

Stephen Giles Peresich, Randi Peresich Mueller, Johanna Malbrough McMullan, attorneys for appellant.

Christopher Solop, Brenda Tanner Redfern, Lynn Patton Thompson, attorneys for appellees.

Before DICKINSON, P.J., CHANDLER and KING, JJ.

KING, Justice, for the Court:

¶ 1. H. Gordon Myrick, Inc. (Myrick) ¹ contracted with Harrison County Commercial Lot (HCCL) to build HCCL an executive office building. The parties' contract contained an arbitration provision, which excluded aesthetic-effect claims from arbitration. This case concerns which, if any, of the parties' claims are subject to arbitration. The trial court determined that the arbitration agreement was valid and ordered arbitration on designated, nonaesthetic claims. Aggrieved, HCCL appeals and Myrick cross-appeals.

¶ 2. HCCL contends that all of its claims are related to aesthetic effect and, thus, not subject to arbitration. HCCL also challenges the validity of the arbitration agreement, which claims are subject to arbitration, and the trial court's ruling on several of its motions. Myrick raises three claims on cross-appeal: whether HCCL waived its right to litigate aesthetic-effect claims, whether the trial court erred by accepting HCCL's untimely aesthetic-effect-claim submission, and whether the trial court erred by not ordering all claims to arbitration.

¶ 3. We find that the parties' claims are without merit. But it is difficult to determine why the trial court ordered certain punch-list ² items to arbitration and others not. Thus, we remand to the trial court to provide further explanation on the punch-list items alone.

FACTS AND PROCEDURAL HISTORY

¶ 4. HCCL is an owner and developer of commercial buildings, and Myrick is a contractor. On March 26, 2008, the parties contracted for Myrick to build HCCL an executive—office building—the Cain Office Building—in Gulfport, Mississippi. The parties used a standard construction contract created by the American Institute of Architects (AIA) and amended the document to suit their needs. The contract contained provisions regarding mediation and arbitration of certain disputes.

¶ 5. Construction commenced in April 2008, and, by 2009, HCCL was unhappy with Myrick's choice of project manager and Myrick's failure to complete the project on time. On May 1, 2009, Myrick declared the building substantially complete. On May 4, 2009, HCCL, unsatisfied with the building's appearance, submitted punch-list items for Myrick to correct. But, four days later, HCCL terminated Myrick and retained a new contractor to finish the project.

¶ 6. Thereafter, Myrick filed a construction lien against HCCL. In a letter to HCCL, Myrick agreed to mediate claims regarding the punch-list items, but demanded HCCL pay its outstanding balance. HCCL refused to remit payment, requested Myrick to cancel the lien, and expressed its desire to resolve the dispute through mediation. Unsatisfied with HCCL's response, Myrick filed concurrently a mediation request and a demand for arbitration with the American Arbitration Association on June 16, 2009. And, before mediation occurred, Myrick filed a motion to compel arbitration in the Harrison County Circuit Court.

¶ 7. Mediation occurred in August 2009 and was unsuccessful. On August 31, 2009, HCCL moved to dismiss Myrick's previously filed motion to compel arbitration, arguing that Myrick had filed its motion prematurely and thus had waived its right to arbitrate. Then, on September 1, 2009, HCCL filed a separate breach-of-contract action against Myrick in the Harrison County Circuit Court and alleged-the following claims/relief: removal of wrongful construction lien, slander of title, removal of cloud on title, abuse of legal process, breach of contract, negligence, fraud and intentional misrepresentation, negligent misrepresentation, breach of duty of good faith and fair dealing, accounting, and an injunction regarding arbitration. Myrick moved to dismiss HCCL's complaint and to compel arbitration.

¶ 8. On January 8, 2010, the trial court entered an order which determined that the parties' contract included a valid, enforceable arbitration agreement. The trial court reserved its ruling on which claims were subject to arbitration, stating it would determine the issue later in a summary proceeding. The trial court instructed the parties to submit a memo detailing which claims they thought were related to aesthetic effect and, thus, not subject to arbitration.³ The order stated that “expert testimony is not necessary” and “no discovery will be conducted prior to the hearing.”

¶ 9. Following that ruling, HCCL filed a direct appeal and an interlocutory appeal to this Court. Myrick filed a motion to dismiss HCCL's appeals, arguing that the trial court's order failed to dispose of all issues. On March 4, 2010, this Court dismissed HCCL's appeals and remanded the case to the trial court for further proceedings.

¶ 10. While HCCL's appeals were pending, Myrick filed its aesthetic-claims submission—the affidavit of Lee R. Connell, a registered architect—on February 4, 2010.⁴ In his expert opinion, Connell opined that none of HCCL's claims was related to aesthetic effect. On March 16, 2010, HCCL filed its submission. HCCL also filed the affidavits of Starann Lamier, its chief operating officer, and Louis Anglada and Kempton Batia, who were hired to complete the work. HCCL claimed that all of its claims were related to aesthetic effect and, thus, not subject to arbitration. Both parties moved to strike the others' submissions—Myrick's for improper expert testimony and HCCL's for being late. The trial court denied both motions.

¶ 11. Following oral argument, the trial court ruled that some of HCCL's punch-list items were aesthetic and, thus, would be submitted to a jury. The trial court's order stated that items not listed were subject to arbitration. Aggrieved, HCCL appeals, and Myrick cross-appeals the trial court's order.

ANALYSIS

¶ 12. A grant or denial of a motion to compel arbitration is reviewed de novo. Cmty. Bank of Miss. v. Stuckey, 52 So.3d 1179, 1181 (¶ 12) (Miss.2010). Mississippi law, like federal law, favors the enforcement of valid arbitration agreements. Smith Barney, Inc. v. Henry, 775 So.2d 722, 724 (¶ 8) (Miss.2001). Accordingly, the Federal Arbitration Act (FAA) provides that agreements to arbitrate “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” East Ford, Inc. v. Taylor, 826 So.2d 709, 713 (¶ 11) (Miss.2002) (citing 9 U.S.C. § 2). Thus, “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.” Id. (citation omitted).

¶ 13. The Court does not review the merits of the underlying claim. Smith Barney, 775 So.2d at 725 (¶ 9). Under the Federal Arbitration Act, the Court employs a two-part test: (1) “whether the parties intended to arbitrate the dispute,” and (2) “whether legal constraints external to the parties' agreement foreclosed the arbitration of those claims.” Scruggs v. Wyatt, 60 So.3d 758, 766 (¶ 17) (Miss.2011); see also East Ford, 826 So.2d at 713 (¶¶ 9–10). The first prong has two considerations: (1) whether there is a valid arbitration agreement, and (2) whether the parties' disputes fall within the scope of that agreement. Id. Because arbitration is a matter of contract, the parties cannot be required to arbitrate any disputes which they did not agree to do so. Scruggs, 60 So.3d at 767 (¶ 20).

I. Validity of the Arbitration Agreement

¶ 14. The trial court found that the arbitration agreement was valid and enforceable. HCCL argues that the arbitration agreement is not valid because it fails to include an express waiver of its right to a jury trial. HCCL also contends that the contract is ambiguous, providing for both arbitration and the institution of legal or equitable proceedings. Conversely, Myrick maintains that the arbitration agreement is unambiguous, binding, and enforceable.

A. Ambiguity

¶ 15. “The mere fact that the parties disagree about the meaning of a provision of a contract does not make the contract ambiguous as a matter of law.” Delta Pride Catfish, Inc. v. Home Ins. Co., 697 So.2d 400 (Miss.1997). When determining whether a valid arbitration agreement exists, we employ ordinary principles of contract law. Terminix Int'l, Inc. v. Rice, 904 So.2d 1051, 1055 (¶ 9) (Miss.2004). One principle instructs courts that, in determining whether a contract is ambiguous, they must review the document as a whole. Cherokee Ins. Co. v. Babin, 37 So.3d 45, 48 (¶ 8) (Miss.2010). If the contract is not ambiguous, the court should “accept the plain meaning of a contract as the intent of the parties....” Ferrara v. Walters, 919 So.2d 876, 882 (¶ 13) (Miss.2005). Typically, we construe ambiguities against the drafter of the contract. Gulf Ins. Co. v. Neel–Schaffer, Inc., 904 So.2d 1036, 1049 (¶ 44) (Miss.2004). But in the case of arbitration, that doctrine “must succumb to the federal policy” “to construe ambiguities concerning the scope of arbitrability in favor of arbitration.” Id. at 1049–50 (¶¶ 44–45). We address two issues of ambiguity: whether the parties intended to arbitrate and what exactly is “aesthetic effect.” The latter will be discussed in section five below. Reviewing the contract as a whole, the Court finds no ambiguity regarding whether the parties intended to arbitrate.

¶ 16. The parties' contract provides for the resolution of claims and disputes. First, the parties must mediate:

4.5.1 Any...